10-Q 1 hubg-20220930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022 or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-27754

 

HUB GROUP, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

36-4007085

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

2001 Hub Group Way

Oak Brook, Illinois 60523

(Address, including zip code, of principal executive offices)

(Registrant’s telephone number, including area code): (630) 271-3600

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, par value $.01 per share

 

HUBG

 

NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

 

Accelerated Filer

 

Non-Accelerated Filer

 

Smaller Reporting Company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

On October 28, 2022, the registrant had 32,654,474 outstanding shares of Class A common stock, par value $.01 per share, and 574,903 outstanding shares of Class B common stock, par value $.01 per share.

 

 


 

HUB GROUP, INC.

INDEX

 

 

Page

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Consolidated Balance Sheets – September 30, 2022 (unaudited) and December 31, 2021

3

Unaudited Consolidated Statements of Income and Comprehensive Income – Three and Nine Months Ended September 30, 2022 and 2021

4

Unaudited Consolidated Statements of Stockholders’ Equity – Three and Nine Months Ended September 30, 2022 and 2021

5

Unaudited Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2022 and 2021

 

Notes to Unaudited Consolidated Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

Item 3. Quantitative and Qualitative Disclosures about Market Risk

22

Item 4. Controls and Procedures

22

 

PART II. OTHER INFORMATION

 

23

 

Item 1. Legal Proceedings

 

23

Item 1A. Risk Factors

23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

23

Item 6. Exhibits

24

 

 

 

 

 

 

 

 

 

2


 

HUB GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

September 30,

 

 

December 31,

 

 

2022

 

 

2021

 

ASSETS

(unaudited)

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

$

211,921

 

 

$

159,784

 

Accounts receivable trade, net

 

780,868

 

 

 

701,512

 

Other receivables

 

3,902

 

 

 

3,022

 

Prepaid taxes

 

3,599

 

 

 

2,191

 

Prepaid expenses and other current assets

 

22,646

 

 

 

27,779

 

TOTAL CURRENT ASSETS

 

1,022,936

 

 

 

894,288

 

 

 

 

 

 

 

Restricted investments

 

16,888

 

 

 

24,256

 

Property and equipment, net

 

755,580

 

 

 

681,451

 

Right-of-use assets - operating leases

 

101,572

 

 

 

44,036

 

Right-of-use assets - financing leases

 

1,710

 

 

 

1,252

 

Other intangibles, net

 

204,524

 

 

 

196,672

 

Goodwill

 

628,093

 

 

 

576,913

 

Other assets

 

21,359

 

 

 

18,426

 

TOTAL ASSETS

$

2,752,662

 

 

$

2,437,294

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable trade

$

403,471

 

 

$

424,923

 

Accounts payable other

 

24,517

 

 

 

12,493

 

Accrued payroll

 

68,261

 

 

 

56,938

 

Accrued other

 

112,858

 

 

 

82,827

 

Lease liability - operating leases

 

27,778

 

 

 

11,364

 

Lease liability - financing leases

 

1,686

 

 

 

1,251

 

Current portion of long-term debt

 

102,093

 

 

 

97,273

 

TOTAL CURRENT LIABILITIES

 

740,664

 

 

 

687,069

 

 

 

 

 

 

 

Long-term debt

 

217,771

 

 

 

177,479

 

Non-current liabilities

 

44,658

 

 

 

41,572

 

Lease liability - operating leases

 

79,758

 

 

 

34,916

 

Deferred taxes

 

152,426

 

 

 

155,944

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2022 and 2021

 

-

 

 

-

 

Common stock

 

 

 

 

 

Class A: $.01 par value; 97,337,700 shares authorized; 41,312,185 shares issued in 2022 and 41,224,792 shares issued in 2021; 32,676,559 shares outstanding in 2022 and 33,907,734 shares outstanding in 2021.

 

413

 

 

 

412

 

Class B: $.01 par value; 662,300 shares authorized; 574,903 shares issued and outstanding in 2022 and 662,296 shares issued and outstanding in 2021.

 

6

 

 

 

7

 

Additional paid-in capital

 

202,657

 

 

 

189,256

 

Purchase price in excess of predecessor basis, net of tax benefit of $10,306

 

(15,458

)

 

 

(15,458

)

Retained earnings

 

1,702,308

 

 

 

1,424,634

 

Accumulated other comprehensive loss

 

(238

)

 

 

(207

)

Treasury stock; at cost, 8,635,626 shares in 2022 and 7,317,058 shares in 2021.

 

(372,303

)

 

 

(258,330

)

TOTAL STOCKHOLDERS' EQUITY

 

1,517,385

 

 

 

1,340,314

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,752,662

 

 

$

2,437,294

 

 

See notes to unaudited consolidated financial statements.

3


 

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(in thousands, except per share amounts)

 

 

 

Three Months

 

 

Nine Months

 

 

Ended September 30,

 

 

Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

1,355,407

 

 

$

1,075,107

 

 

$

4,054,987

 

 

$

2,975,980

 

Transportation costs

 

1,132,174

 

 

 

917,507

 

 

 

3,369,899

 

 

 

2,589,072

 

Gross margin

 

223,233

 

 

 

157,600

 

 

 

685,088

 

 

 

386,908

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

65,502

 

 

 

65,370

 

 

 

202,469

 

 

 

176,696

 

General and administrative

 

28,109

 

 

 

23,445

 

 

 

78,249

 

 

 

63,058

 

Depreciation and amortization

 

11,884

 

 

 

8,912

 

 

 

33,936

 

 

 

26,282

 

Total costs and expenses

 

105,495

 

 

 

97,727

 

 

 

314,654

 

 

 

266,036

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

117,738

 

 

 

59,873

 

 

 

370,434

 

 

 

120,872

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(2,151

)

 

 

(1,793

)

 

 

(5,251

)

 

 

(5,555

)

Other, net

 

(383

)

 

 

(96

)

 

 

(446

)

 

 

(382

)

Total other expense, net

 

(2,534

)

 

 

(1,889

)

 

 

(5,697

)

 

 

(5,937

)

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

115,204

 

 

 

57,984

 

 

 

364,737

 

 

 

114,935

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

27,879

 

 

 

14,646

 

 

 

87,063

 

 

 

27,775

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

87,325

 

 

 

43,338

 

 

 

277,674

 

 

 

87,160

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(35

)

 

 

(25

)

 

 

(31

)

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

$

87,290

 

 

$

43,313

 

 

$

277,643

 

 

$

87,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

2.63

 

 

$

1.30

 

 

$

8.29

 

 

$

2.61

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

2.61

 

 

$

1.28

 

 

$

8.21

 

 

$

2.58

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of shares outstanding

 

33,145

 

 

 

33,433

 

 

 

33,480

 

 

 

33,427

 

Diluted weighted average number of shares outstanding

 

33,521

 

 

 

33,873

 

 

 

33,807

 

 

 

33,842

 

 

See notes to unaudited consolidated financial statements.

4


 

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Purchase Price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A & B

 

 

 

 

 

in Excess of

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

Predecessor

 

 

 

 

 

Other

 

 

Treasury

 

 

 

 

 

Shares

 

 

 

 

 

Paid-in

 

 

Basis, Net

 

 

Retained

 

 

Comprehensive

 

 

Stock

 

 

 

 

 

Issued

 

 

Amount

 

 

Capital

 

 

of Tax

 

 

Earnings

 

 

Income

 

 

Shares

 

 

Amount

 

 

Total

 

Balance June 30, 2021

 

41,887,088

 

 

$

419

 

 

$

186,210

 

 

$

(15,458

)

 

$

1,296,982

 

 

$

(176

)

 

 

(7,519,741

)

 

$

(260,901

)

 

$

1,207,076

 

Stock withheld for payments of withholding taxes

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(968

)

 

 

(65

)

 

 

(65

)

Issuance of restricted stock awards, net of forfeitures

 

-

 

 

 

-

 

 

 

754

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(18,366

)

 

 

(754

)

 

 

-

 

Share-based compensation expense

 

-

 

 

 

-

 

 

 

4,801

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,801

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

43,338

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

43,338

 

Foreign currency translation adjustment

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(25

)

 

 

-

 

 

 

-

 

 

 

(25

)

Balance September 30, 2021

 

41,887,088

 

 

$

419

 

 

$

191,765

 

 

$

(15,458

)

 

$

1,340,320

 

 

$

(201

)

 

 

(7,539,075

)

 

$

(261,720

)

 

$

1,255,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2022

 

41,887,088

 

 

$

419

 

 

$

195,603

 

 

$

(15,458

)

 

$

1,614,983

 

 

$

(203

)

 

 

(7,244,215

)

 

$

(260,155

)

 

$

1,535,189

 

Stock withheld for payments of withholding taxes

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(892

)

 

 

(63

)

 

 

(63

)

Purchase of treasury stock

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(945,497

)

 

 

(75,000

)

 

 

(75,000

)

Purchase of treasury stock from related party (Note 8)

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(430,121

)

 

 

(34,767

)

 

 

(34,767

)

Issuance of restricted stock awards, net of forfeitures

 

-

 

 

 

-

 

 

 

2,318

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(14,901

)

 

 

(2,318

)

 

 

-

 

Share-based compensation expense

 

-

 

 

 

-

 

 

 

4,736

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,736

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

87,325

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

87,325

 

Foreign currency translation adjustment

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(35

)

 

 

-

 

 

 

-

 

 

 

(35

)

Balance September 30, 2022

 

41,887,088

 

 

$

419

 

 

$

202,657

 

 

$

(15,458

)

 

$

1,702,308

 

 

$

(238

)

 

 

(8,635,626

)

 

$

(372,303

)

 

$

1,517,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2020

 

41,887,088

 

 

$

419

 

 

$

186,058

 

 

$

(15,458

)

 

$

1,253,160

 

 

$

(191

)

 

 

(7,675,084

)

 

$

(266,065

)

 

$

1,157,923

 

Stock withheld for payments of withholding taxes

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(70,176

)

 

 

(4,038

)

 

 

(4,038

)

Issuance of restricted stock awards, net of forfeitures

 

-

 

 

 

-

 

 

 

(8,383

)